The Entrepreneurial Impact of the European Directive on Corporate Sustainability Due Diligence

Juan Dempere (), Eseroghene Udjo and Paulo Mattos
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Juan Dempere: Higher Colleges of Technology, Al-Ain Abu Dhabi 25026, United Arab Emirates
Eseroghene Udjo: Higher Colleges of Technology, Al-Ain Abu Dhabi 25026, United Arab Emirates
Paulo Mattos: Higher Colleges of Technology, Al-Ain Abu Dhabi 25026, United Arab Emirates

Administrative Sciences, 2024, vol. 14, issue 10, 1-30

Abstract: The European Commission’s Directive on Corporate Sustainability Due Diligence, adopted in 2022 and approved in 2024, mandates that companies identify, prevent, and mitigate hostile human rights and environmental impacts across their operations and supply chains, integrating sustainability into corporate governance. This article examines the directive’s influence on European entrepreneurial activity, ecosystems, and innovation using a qualitative descriptive literature analysis, comparative frameworks, impact assessments, policy recommendations, and case studies. Findings suggest that while the directive imposes compliance challenges and costs, particularly for startups and small and medium-sized enterprises, it offers significant long-term benefits, such as improved risk management, enhanced reputation, and market differentiation. The directive promotes accountability and ethical practices, harmonizing due diligence across the EU and fostering a culture of sustainability. It concludes that companies addressing these impacts can gain a competitive edge and attract sustainability-focused investors, necessitating support mechanisms for startups and small and medium-sized enterprises to mitigate burdens and encourage compliance.

Keywords: sustainability; corporate social responsibility; corporate sustainability; due diligence; ESG; European Union; corporate governance (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2024
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